Chargebee scores $250 million at a valuation of $3.5 billion

Chargebee, a subscription management and recurring billing platform, has raised a fresh $250 million in funding led by Tiger Global and Sequoia Capital at a valuation of $3.5 billion. Insight Partners, Sapphire Ventures and Steadview Capital also backed the investment round.

The Chennai and San Francisco-based startup-turned unicorn in April last year when it garnered about $125 million in funding from a clutch of investors at a valuation of $1.4 billion. Founded in 2011 and led by co-founder & CEO Krish Subramanian, Chargebee develops tools to help SaaS (software-as-a-service) and SaaS like businesses to streamline revenue operations. The company integrates with payment gateways like Stripe, Baintree, PayPal and enables its clients to automate recurring payment collection, along with invoicing, taxes and customer management. The startup counts Freshworks, Calendly and Fujitsu among its wide base of business customers.

Chargebee, which said that the fresh investment is a reflection of “growing demand”, will use the capital to fund product innovation and global expansion. “As subscription offerings continue to rapidly evolve, our focus remains on providing a flexible growth engine to power, capture and understand revenue, all in real time,” Subramanian said in a statement.

The SaaS-led business model is gaining momentum globally. In a company blog published in January, analysts at Chargebee said that while SaaS was initially perceived as a fit only for startups and small businesses, it gained traction over the years and rapidly ate into markets dominated by traditional on-premise software. By 2015, nearly 50% of all CRM systems were supported by SaaS. According to Gartner, the number is estimated to go up to about 80%-85% by 2025. “Besides CRM, SaaS began casting its spell over sales force automation, analytics, human resource management platforms. Today, even enterprise businesses are embracing SaaS. As per a Deloitte report, 70% of CIOs who were part of a global CIO survey preferred cloud-based SaaS for scalability,” the analysts explained in the blog. Businesses cite ease of use and cost effectiveness as their top reasons for ranking SaaS above on-premise software.

Investments in Indian SaaS startups are estimated to have touched $4.5 billion in 2021, a steep 170% increase over 2020, analysts at Bain & Company had said in a report. Within the SaaS space, the horizontal business software segment that covers events tech, enterprise collaboration, conversational artificial intelligence (AI) and Human Resources (HR) tech continues to drive the bulk of the investments, accounting for more than half of all SaaS funding in India.

More than 35 Indian SaaS companies—which is a sevenfold increase over five years, had an annual recurring revenue (ARR) of over $20 million in 2021.

About seven to nine of these firms reached the $100 million ARR milestone compared to just about one or two companies that managed to achieve this feat five years ago.

Last month, SaaS startup Darwinbox led by Chaitanya Peddi, Jayant Paleti, and Rohit Chennamaneni entered the unicorn club with a fresh funding of $72 million.

“We believe every company will be a subscription company in the future. Chargebee is the leading revenue management partner for the subscription economy. Sequoia's investment reflects the growing market need and belief in the Chargebee team,” said Tejeshwi Sharma, MD at Sequoia Capital.